Consequences of Sponsor Licence Non-Compliance
If a sponsor licence holder does not adhere to the regulations set by the Home Office, it may result in the Suspension, Downgrading or Revocation of their sponsor licence. If the licence is suspended, the company gets 20 working days to provide a response to the Home Office, during which they face the following consequences.
- Inability to Sponsor New Employees: During the suspension period, the employer is not allowed to sponsor any new employees. This means they cannot issue new Certificates of Sponsorship (CoS) to potential employees, which can impact the company's ability to fill critical roles.
- Review and Investigation: The suspension is typically followed by a review or investigation period, during which the Home Office assesses whether the sponsor has failed to meet their obligations. The sponsor may need to provide additional information or evidence to support their case.
- Impact on Current Employees: The existing sponsored employees can usually continue working for the sponsor during the suspension period. However, their status may be affected if the licence is eventually revoked.
- Reputation damage: A breach of sponsor licence and Home Office rules can also damage the company's reputation, both with the Home Office, vendors, regulators and in the public eye. This can have long-lasting consequences for the company's ability to attract and retain employees, customers, and shareholders.
- Risk of Licence Revocation: If, after the investigation, the Home Office finds non-compliance or other serious issues, the sponsor licence can be revoked. This would mean the immediate cessation of all sponsored visas and the employer would need to stop employing all non-EU nationals who were sponsored under the skilled worker category.
- Financial Impact: There may be financial implications due to the inability to hire needed staff from abroad, potential legal costs associated with challenging the suspension or revocation, and possible penalties.
- Operational Disruptions: The inability to bring in new foreign talent can lead to operational disruptions, especially if the roles are critical and cannot be easily filled by the local workforce.
- Compliance Improvement: The sponsor might need to improve their compliance systems and processes to meet the Home Office requirements, which could involve additional resources or changes in internal policies.
Failing to justify or provide a reasonable explanation for any of the allegations put forward by the Home Office, the company's licence may be downgraded to a B rating or Revoked permanently. Overall, it is important to be compliant with sponsor licence and Home Office rules to avoid these negative consequences and ensure smooth operations for the company.
Common Challenges in Performing Sponsor Licence Duties
- Lack of understanding of immigration regulations: One common challenge faced by businesses is a lack of understanding of the complex and ever-changing immigration regulations in the UK. This can lead to mistakes in the sponsor licence application process or failure to meet ongoing compliance requirements.
- Inadequate record-keeping: Businesses must maintain detailed records of their sponsored employees, including copies of their right-to-work documents and other relevant information. Failure to keep accurate records can result in compliance issues and potential penalties. If UKVI decides to do a compliance visit, then a lack of record-keeping can adversely affect the organisation.
- Monitoring visa expiry dates: It is important for businesses to monitor the expiry dates of their sponsored employees' visas to ensure they apply for extensions in a timely manner.
- Changes in employee circumstances: Businesses must notify UK Visas and Immigration of any changes in their sponsored employees' circumstances, such as a change in job role, duties, unpaid leave, salary reductions, etc. Failing to update this information can result in compliance action against the sponsor.
- Maintaining salary thresholds: Businesses must ensure that their sponsored employees continue to meet the minimum salary thresholds required by the Home Office.
- Cost Implications: The financial burden of maintaining a sponsor licence, including the costs associated with compliance, application fees, and potentially legal advice, can be significant, especially for smaller businesses.
- Lack of resources: Compliance with sponsorship regulations can be time-consuming and resource-intensive for businesses, particularly smaller companies with limited HR capacity. This can lead to inadvertent non-compliance issues.
Best Practices to fulfil Sponsor Compliance Responsibilities
To ensure that businesses are staying compliant with the sponsor licence duties, there are some best practices they could adopt:
- Monitor changes in immigration laws and regulations to stay up to date on any new requirements or guidelines.
- Provide training for employees involved in the sponsorship process to ensure they understand their responsibilities.
- Keep thorough and accurate records of sponsored employees, their roles, and any changes to their employment status.
- Conduct regular audits of existing systems and practices to identify and address any potential compliance issues.
- Have a designated compliance officer or team responsible for overseeing sponsor licence obligations and addressing any issues that arise.
- Seek legal advice or consulting services from immigration solicitors to ensure ongoing compliance with sponsor licence requirements.
- Establish clear communication channels with UK Visas and Immigration (UKVI) to address any questions or concerns about sponsor licence adherence.
- Utilise technology such as our immigration compliance software to help track sponsored employees' visa statuses, ensure timely renewals, identify SMS reporting, monthly compliance checks and provide alerts for any compliance issues.
Sponsor Compliance Solution by City Legal
Immigration compliance is hard to manage but becomes easy with the use of the right technology. City Legal is a London-based law firm that has been running successfully for 10 years now and has seen many seasons of immigration over the years. With years of expertise, we crafted a compliance solution for sponsor licence holders to ensure that businesses can employ overseas talent without worrying about staying compliant and other reporting duties.
All the challenges and best practices mentioned above are taken into account while building this compliance portal, which is backed by expert solicitors to add a human touch to immigration compliance. So, we are not leaving our clients in the hands of tech alone because our solicitors will take care of everything in the backend.
As sponsor licence holders, businesses can benefit from our compliance portal, which is available exclusively to our retainer clients.
What are the key features of City Legal Compliance Portal?
- Organisation & Employee Details: This feature enables employers to maintain up-to-date records of both the organisation and each sponsored employee. It includes personal details, job descriptions, and sponsorship information, ensuring that all records are current and easily accessible for compliance purposes.
- Record Keeping: Essential for tracking all necessary documents and interactions related to sponsorship. This includes maintaining logs of all communications and changes that may affect the status of the sponsorship, helping employers stay compliant with Home Office regulations.
- Secure Document Storage: A secure platform for storing sensitive documents such as passport copies, visa information, and employment contracts. This feature ensures that all documents are protected against unauthorised access and are readily available for audits or inspections.
- Resources: Provides educational materials, legal updates, and guidance documents to help employers understand and comply with their obligations under the sponsor licence system. This can include training videos, FAQs, and links to relevant Home Office publications.
- AI Chat Bot Assistance: Offers real-time assistance via an AI-powered chatbot that can answer questions, provide guidance on sponsorship duties, and help with troubleshooting issues in managing sponsor licences.
- Identifying SMS Reporting Obligations: Assists employers in understanding their reporting requirements through the Sponsor Management System (SMS), including what changes need to be reported about their organisation or sponsored employees by intelligent automation.
- Monthly Compliance Checks: The system performs monthly audits, prompting employers and employees to ensure the details are maintained correctly, and no reporting is missed. This proactive feature helps prevent potential non-compliance issues.
- Expiry Reminders & Custom Notifications: Automated reminders for important dates such as visa & passport expiries. Custom notifications can be set up to alert users about specific events or changes as desired.
- Track & report Employee Absences: Enables employers to monitor and report absences of sponsored employees as required by the Home Office. This includes keeping track of sickness, unpaid leave, or other absences that could affect the terms of sponsorship.
- Instruct for New Matters: Allows users to initiate new legal or administrative processes directly through the portal, such as applying for visa extensions or reporting changes in employee circumstances.
- Track Matter or Reporting Progress: Provides real-time updates on the status of ongoing matters or reports, ensuring that employers and their HR teams can monitor progress and meet all deadlines.
- Report Generation: Facilitates the creation of comprehensive reports on various aspects of sponsorship management, including compliance status, employee records, historical data, expiry dates etc. which can be used for internal reviews or audits.
- Compliance History: Keeps a historical record of all compliance activities, audits, and reports. This archive is crucial for demonstrating adherence to Home Office regulations over time and can be invaluable during inspections or reviews.
How can City Legal help to chart a sponsor compliance roadmap?
- Assessing Your Current Compliance Status The first step in creating a Sponsor Compliance Roadmap is to assess your current compliance status. This involves conducting a thorough review of your organisation's current practices, policies, and procedures to identify any areas where you may be falling short of compliance requirements. This may involve reviewing regulatory guidelines, conducting mock internal audits, and seeking input from key stakeholders.
- Setting Clear Compliance Goals Once we have identified any areas of non-compliance, it is important to set clear compliance goals for your organisation. These goals should be specific, measurable, attainable, relevant, and time-bound (SMART). By setting clear goals via an Action Plan further to a Mock Audit, we can ensure that your organisation is focused on achieving compliance in a strategic and targeted manner.
- Developing a Compliance Strategy With your compliance goals in place, the next step is to develop a compliance strategy to guide your organisation towards meeting these goals. This may involve creating new management policies and procedures, updating employee handbooks with compliance details, conducting mock audits and further action plans. Your compliance strategy should be aligned with your organisation's overall mission and objectives.
- Implementing and Monitoring Compliance Measures Once you have developed a compliance strategy, the final step is to implement and monitor compliance measures to ensure your organisation meets its compliance goals. This may involve training employees on new policies and procedures, implementing solutions, such as our compliance portal, conducting regular audits and assessments, and tracking the progress towards compliance. It is important to regularly review and update your compliance measures to adapt to changing regulatory requirements and organisational needs.
These steps might seem too much work for an organisation and often lead to them not hiring overseas candidates, but having skilled workers is a benefit to the organisation's recruitment strategy. This is why having a compliance portal can be a good investment for your organisation, as it makes your organisation audit ready for any future compliance visits.
Originally published 17 June 2024
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.